Risk Aversion, Liability Rules, and Safety

This paper investigates the performance of liability rules in two-party stochastic externality problems where negotiations are feasible and side payments are based on the realized level of externalities. Results show that an increase in polluter liability does not necessarily increase safety or efficiency in cases where the polluter is risk neutral. Complete polluter liability is found to yield Pareto optimality. When either party is risk averse, an increase in polluter liability may sometimes reduce safety and efficiency. If the polluter is risk neutral and the victim is risk averse, Pareto optimality is only achieved by assigning full liability on the polluter, i.e. giving the victim complete property rights to a clean environment. If the polluter is risk averse and the victim is risk neutral, no level of polluter liability is optimal. In this case, optimality can only be achieved through a contract on abatement activities, such that the risk-averse polluter receives a guaranteed payment regardless of the stochastic outcome.     

CHILDREN'S RIGHTS IN EUROPEAN LEGAL PROCEEDINGS: WHY ARE FAMILY PRACTICES SO DIFFERENT FROM LEGAL THEORIES?

Debates about child custody following parental separation often have been framed in terms of a battle between the competing rights of different family members. In the United States, advocates of mothers’ rights square off against proponents of fathers’ rights, with each side claiming to truly represent children's rights. Of course, not all advocates lay claim to children's rights in contact and custody disputes merely as a tactical maneuver. Some experts believe that children are entitled to (and benefit from) their own, independent legal advocate in custody cases. In theory, at least, the position that children lay claim to a third set of independent rights is strongly held in Europe, more strongly than in many U.S. states, because of the adoption of United Nations Convention on the Rights of the Child in Europe, but not in the United States. In this article, we examine children's rights in custody disputes from a European perspective, particularly children's legal right to contact with their parents, as well as the children's right to be heard in custody and contact disputes. We find that, despite differences in legal theory, tradition, and family demographics, European countries ultimately face a familiar reality: Custody and contact disputes are, in reality, more about renegotiating family relationships than they are a matter of a mother's, father's, or child's rights.     

The Resurrection of Group Selection as a Theory of Human Cooperation

Two books edited by members of the MacArthur Norms and Preferences Network (an interdisciplinary group, mainly anthropologists and economists) are reviewed here. These books in large part reflect a renewed interest in group selection that has occurred among these researchers: they promote the theory that human cooperative behavior evolved via selective processes which favored biological and/or cultural group-level adaptations as opposed to individual-level adaptations. In support of this theory, an impressive collection of cross-cultural data are presented which suggest that participants in experimental economic games often do not behave as self-interested income maximizers; this lack of self-interest is regarded as evidence of group selection. In this review, problems with these data and with the theory are discussed. On the data side, it is argued that even if a behavior seems individually-maladaptive in a game context, there is no reason to believe that it would have been that way in ancestral contexts, since the environments of experimental games do not at all resemble those in which ancestral humans would have interacted cooperatively. And on the theory side, it is argued that it is premature to invoke group selection in order to explain human cooperation, because more parsimonious individual-level theories have not yet been exhausted. In summary, these books represent ambitious interdisciplinary contributions on an important topic, and they include unique and useful data; however, they do not make a convincing case that the evolution of human cooperation required group selection.